“New infrastructure” brings new opportunities
We believe that the company, as the vanguard in the development of Tefat Group's informatization business, is expected to rely on better ToB and ToG market expansion capabilities to achieve continuous expansion of the informatization business and create new growth points in the context of new infrastructure. Furthermore, the large-scale construction of 5G networks and the improvement of the level of informatization in the defense and military industry will drive the long-term improvement of the company's main business. We expect the company's EPS from 2020 to 2022 to be 0.11/0.39/0.50 yuan respectively. Based on the segmental valuation method, we believe that the company's reasonable valuation in 2021 was 11.238 billion yuan, and the corresponding target price was 13.79 yuan, covering the “increase in holdings” rating for the first time.
A local state-owned enterprise in Shenzhen that is deeply involved in the information technology business
The company is a local state-owned enterprise in Shenzhen, and the majority shareholder is Tefa Group Co., Ltd. Since its listing, the company has, on the one hand, expanded horizontally in the field of informatization and has now formed two major business layouts of optical communication and military informatization; on the other hand, it has promoted deep integration of the industry and continuously enhanced its comprehensive competitiveness. In the field of optical communication, the company has successively expanded its business scope from optical fiber cables to the fields of intelligent access and optical modules through asset acquisition in the optical communication field. We believe that the company's operation in the field of information technology over the years has accumulated good customer resources for it, and has developed strong To B side and To G side business development capabilities, which forms the company's core competitiveness.
The Shenzhen version of “New Infrastructure” opens a new era of digital economic development in the Special Administrative Region
We believe that “new infrastructure” is an important means for China to accelerate its digital transformation. Beijing and Shanghai introduced “new infrastructure” development plans one after another this year. As the “vanguard” of China's reform and innovation, Shenzhen issued a new “new infrastructure” policy in July. The first batch of new infrastructure projects totaled 95, with a total investment of about 41.19 billion yuan. We believe that the Shenzhen version of “New Infrastructure” is expected to open a new era in the digital economy of the Special Administrative Region. As a local state-owned enterprise in Shenzhen that is deeply involved in the information technology business, D&D Information is expected to rely on its strong To B and To G side market expansion capabilities to share the dividends of the Special Administrative Region's informatization construction.
Multi-point layout of information-based business
The company has now formed a two-wheel drive pattern of optical communication and military informatization in the field of information technology. In terms of optical communication business, we believe that large-scale construction of 5G networks is expected to stabilize demand in the optical fiber and cable industry and drive demand for 5G optical modules. The company acquired Sichuan Huatuo in 19 and entered the optical module field to create a new business growth point. In terms of military business, demand for informatization has become a long-term driving force for the development of national defense equipment, and the company's active promotion of military product iteration and customer expansion is expected to share the industry's growth dividends.
In addition to this, the company continues to expand in data center wiring, cloud computing technology services, innovative energy saving technology consulting and project management to achieve the extension of the informatization business from two-wheel drive to multi-point layout.
The first coverage gave an “increase in holdings” rating
We believe that the trend in the company's main business is improving, and the multi-point layout of the information technology business has brought new opportunities. We expect the company's EPS from 2020 to 2022 to be 0.11/0.39/0.50 yuan respectively. Based on the segmental valuation method, we believe that the company's reasonable valuation in 2021 was 11.238 billion yuan, and the corresponding target price was 13.79 yuan, covering the “increase in holdings” rating for the first time.
Risk warning: Competition in the optical fiber and cable industry is intensifying; the expansion of military informatization business falls short of expectations.
